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Inflation rises year-on-year to record 8.4pc in August

While the consumer price index inflation did not increase much compared to last month of July, it recorded a slightly higher increase on a year-on-year bases compared to August 2020. According to a recent government report the inflation is poised to reach 9 per cent due to monetary expansion and increasing prices in international market.

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The consumer price index (CPI) of Pakistan recorded 8.35 per cent on a year-on-year bass in August 2021, which is identical to the inflation recorded in July 2021, showing minimal month-on-month increase.

However, according to the data released by the Pakistan Bureau of Statistics (PBS), on a year-on-year basis compared to August 2020, it is slightly higher as a year ago it was 8.2 per cent.

Similarly, on a monthly review of prices, on a month-on-month basis, the CPI increased 0.6 per cent in August compared to an increase of 1.3 per cent in the preceding month and an increase of 0.6 per cent in August 2020, the brief read.

Read more: Inflation slows down to 8.4pc in July

Reporting both urban and rural inflation, the report read that the CPI Inflation Urban increased by 8.3% on year-on-year basis in August 2021 as compared to an increase of 8.7% in the previous month and 7.1% in August 2020. On month-on-month basis, it increased by 0.5% in August 2021 as compared to increase of 1.29% in the previous month and an increase of 0.8% in August 2020.

A little higher than urban, the PBS data showed that CPI inflation Rural increased by 8.4% on year-on-year basis in August 2021 as compared to an increase of 8.0% in the previous month and 9.9% in August 2020. On month-on-month basis, it increased by 0.7% in August 2021 as compared to increase of 1.4% in the previous month and an increase of 0.4% in August 2020.

The PBS data showed that the Sensitive Price Index (SPI) inflation on year-on-year increased by 15.9% in August 2021 as compared to an increase of 16.2% a month earlier and an increase of 11.7% in August 2020. On a month-on-month basis, SPI inflation increased by 0.7% in August 2021 as compared to increase of 1.8% a month earlier and an increase of 0.9% in August 2020.

In a meeting with Monetary and Fiscal Policies Coordination Board (MFPCB) on 25th August, Governor State Bank of Pakistan pointed out that the global market’s commodity prices would have consequences for Pakistan in the form of higher import bill and rising inflation.

Similarly, a report by the Ministry of Finance said that the inflation may inch over 9% due to monetary expansion and a spike in international commodity prices and the current account deficit could remain over half a billion dollars in August.

The report added that Pakistan’s inflation rate is mainly driven by current and past fiscal and monetary policies, international commodity prices, US dollar exchange rate, seasonal factors and economic agents’ expectations concerning the future developments of these indicators.

The finance ministry said that the current account deficit widened due to growing import volume of energy and non-energy commodities, along with a rising trend in global prices of oil, Covid-19 vaccines, food, and metals.

Read more: Haunted by inflation, PM Imran Khan comes out of his home to check prices

Lastly, the data showed that the core inflation measured by non-food non-energy Urban increased by 6.3% on (YoY) basis in August 2021 as compared to an increase of 6.9% in the previous month and 5.6% in August 2020. On (MoM) basis, it increased by 0.2% in August 2021 as compared to increase of 0.8% in previous month, and an increase of 0.7% in corresponding month of last year i.e., August 2020.

Similarly, the core inflation for rural increased by 6.2% on (YoY) basis in August 2021 as compared to an increase of 6.9% in the previous month and 7.6% in August, 2020. On (MoM) basis, it increased by 0.2% in August 2021 as compared to an increase of 0.7% in previous month, and an increase of 0.8% in corresponding month of last year i.e. August, 2020.